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ORDER NO. PSC -2018 -0247 -PAA -EI DOCKET NO. 20180038 -El PAGE 2 Decision, FPL requested a decrease in its AFUDC rate from 6.16 percent to 5.97 percent. Rule 25- 6.0141(2), F.A.C., Allowance for Funds Used During Construction, provides the following guidance: (2) The applicable AFUDC rate shall be determined as follows: (a) The most recent 13 -month average embedded cost of capital, except as noted below, shall be derived using all sources of capital and adjusted using adjustments consistent with those used by the Commission in the utility's last rate case. (b) The cost rates for the components in the capital structure shall be the midpoint of the last allowed return on common equity, the most recent 13 -month average cost of short term debt and customer deposits and a zero cost rate for deferred taxes and all investment tax credits. The cost of long term debt and preferred stock shall be based on end of period cost. The annual percentage rate shall be calculated to two decimal places. In support of its requested AFUDC rate of 5.97 percent, FPL provided its calculations and capital structure as Schedules A and B attached to its request. We have reviewed the schedules and determined that the proposed rate was calculatedin accordance with Rule 25- 6.0141(2), F.A.C. The requested decrease in the AFUDC rate is due principally to a slight decrease in the cost rates of long term debt and a slightly lower ratio of common equity in the capital structure. The cost of equity is 10.55 percent, which was approved by this Commission by Order No. PSC-2016-0560-AS-El.2 Based on our review, we fmd that the requested decrease in the AFUDC rate from 6.16 percent to 5.97 percent is appropriate, consistent with Rule 25-6.0141, F.A.C., and we therefore approve FPL's request. FPL requested a monthly compounding rate of 0.484385 percent to achieve an annual AFUDC rate of 5.97 percent. In support of the requested monthly compounding rate of 0.484385 percent, FPL provided its calculation as Schedule C attached to its request. Rule 25-6.0141(3), F.A.C., provides a formula for discounting the annual AFUDC rate to reflect monthly compounding. The rule also requires that the monthly compounding rate be calculated to six decimal places. We reviewed the Company's calculations and have determined that they comply with the requirements of Rule 25-6.0141(3), F.A.C. Therefore, we approve a discounted monthly AFUDC rate of 0.484385 percent. 2Order No. PSC -2016 -0560 -AS -EI, issued December 15, 2016, in Docket No. 20160021 -EI, In re: Petition for rate increase by Florida Power & Light Company. 2 -tl